Accompanied by Union Road Transport, Highways and Shipping Minister Nitin Gadkari and others, he participated in the prayer as well.
Prime Minister Modi earlier arrived at Mehrabad International Airport on a two-day official visit to Iran at the invitation of President Hassan Rouhani.
Upon his arrival here, Prime Minister's office tweeted, "Reached Iran, a land with whom India shares civilisational ties. Hope to enhance economic partnership between our nations."
Accorded with red carpet welcome, he was received by Dr. Ali Tayebnia, Iran's Minister of Economic Affairs and Finance.
Prime Minister Modi's visit will mainly focus on connectivity and infrastructure, energy partnership with Tehran and boosting bilateral trade.
India, Iran and Afghanistan will sign an agreement on developing Chabahar port on May 23.
The port will be a game changer for regional connectivity, especially for Afghanistan, which can find an assured and reliable alternative access to India via sea.
The route will also significantly enhance prospects for India's connectivity with Afghanistan, Central Asia and beyond through synergies with other initiatives touching the region such as North-South transport corridor.
Prime Minister Modi's first tour to Iran will feature discussions on terrorism in the region as well as on India's desire to secure energy assets for a fast growing economy.